SMM

According to SMM statistics, as of July 17, the aluminum billet inventory at domestic mainstream consumption areas stood at 156,000 mt, a decrease of 5,000 mt from Monday and a decrease of 4,000 mt from Thursday last week. In terms of outflows from warehouses, the total outflows of domestic aluminum billet from July 7 to July 13 amounted to 44,200 mt, showing an increase of 9,400 mt MoM. Since the inventory buildup turning point was established in mid-June, the aluminum billet inventory level has continued to rise, reaching the highest level for the same period in three years. However, a slight destocking of aluminum billet was achieved within the week. Does this indicate that the inventory buildup turning point for aluminum billet has already formed? This slight destocking of aluminum billet was mainly driven by the impact of production cuts in aluminum billet and the restocking of downstream rigid demand. Since entering July, aluminum billet manufacturers have been receiving news of production cuts due to the accumulation of in-plant inventory and unoptimistic order expectations, aiming to alleviate operational pressure on funds. Meanwhile, the scale of production cuts in regions such as Guangxi, Yunnan, and Guizhou continues to expand, resulting in fewer arrivals in South China and Nanchang areas within the week. Despite the off-season atmosphere in the market, downstream players primarily focused on digesting raw material inventory in the early stage due to the high aluminum prices. This week, the price center has loosened somewhat, stimulating downstream rigid demand restocking, thereby driving down the aluminum billet inventory. SMM believes that while the production cuts by aluminum billet manufacturers have alleviated the arrival pressure on the supply side, the current restocking of rigid demand is more of a short-term driver, and the main theme of the downstream off-season has not changed. Therefore, from a long-term perspective, the aluminum billet inventory will still maintain the rhythm of inventory buildup, and the overall trend has not significantly changed. SMM expects that the aluminum billet inventory will operate within the range of 150,000-180,000 mt next week.